Highlights from the EO print edition, No. 641, Oct 21, 2013
Uncertainties for China's Economy in the 4th Quarter
News, page 5
~ China's GDP grew 7.8 percent in the third quarter, up from 7.5 percent in the second quarter, according to China's National Bureau of Statistics (NBS). The rate was in line with market expectations. "China's economy has maintained steady growth with major indicators saying it's within the rational range," Sheng Laiyun (盛來運(yùn)), a spokesman for the NBS, said at a press conference.
~ The booming real estate market is believed to be one of the biggest driving forces behind the economic rebound. Statistics show that new home prices in 100 major Chinese cities averaged 10,554 yuan per square meter in September, marking the 16th consecutive month the figure has increased. This growth in real estate prices is expected to continue in October.
~ The State Information Center (國家信息中心) released a report predicting 7.6 percent growth for both the fourth quarter and the 2013 annual GDP.
~ Looking back at the first three quarters of 2013, some believe that the government's macro-economic control is swinging back and forth between "pro-growth" and "structural adjustment."
~ What the market is most worried about is the uncertainty that comes with the economic transition. There have been discussions about when the uncertainty could emerge and how it could influence government policy. Real estate is one of the uncertainties. Specialists have debated whether the government will introduce more regulation on the housing market.
~ Rising inflation is another uncertainty that must be considered. China's consumer price index (CPI) rose 3.1 percent year-on-year in September. Inflationary pressures may lead to instability of monetary policy.
~ The recent U.S. government shutdown also presented uncertainty regarding changes in overseas market demand. Yang Weixiao (楊為敩), a senior analyst from Lianxun Security, says that fluctuations in export surpluses brought greater impact to economic growth compared to fluctuations in investment and consumption.
Original article: [Chinese]
Approach to Land Reforms to be Outlined at Third Party Plenum
News, page 6
~ The upcoming Third Plenary Session of the 18th CPC Central Committee is likely to outline the approach of central authorities to a new round of land reform.
~ Current land use policies will be overhauled with a focus on increasing the amount of compensation given to farmers for land acquisition and the process of transfering collectively-owned farming land into plots that are zoned for construction.
~ Relevant government departments will launch a series of intensive land reform measures following the third plenum.
~ As for the key question of whether farmers will be able to directly sell agriculture land on to the market, the Ministry of Land and Resources has said that a unified urban and rural construction land market will be gradually formed, though it also emphasized that 1,800 million mu () of arable land should be protected for agricultural use.
~ Zheng Zhenyuan (鄭振源), former deputy director of the Planning Division of National Bureau of Land Administration (國家土地管理局規(guī)劃司), said that there aren't many new initiatives proposed by the Ministry of Land and Resources as part of the land reform package. From 1999 to 2002, many trials and pilot programs dealing with the transfer of collectively-owned rural land were carried out in the provinces of Anhui, Jiangsu, Zhejiang and Guangdong. All these experiments withered away due to a lack of broader policy support.
~ The proposed reforms have opened up public debate between central ministries, officials and experts about the best way forward.
Original article: [Chinese]
Online Retailers Rev up for Nov 11 Single's Holiday
Corporation, page 30
~ Over the past three years, Nov 11 (or 11/11) has become somewhat of a Hallmark holiday in China created to celebrate being single. On that day, e-commerce companies like Taobao (淘寶) and Jingdong (京東) offer huge discounts and sales campaigns, similar to "Black Friday" in the United States. This year, the battle will be even fiercer as Tencent throws its hat in the discount ring.
~ Alibaba's T-mall launched a promotion campaign starting one month before Nov 11 with the target of achieving at least 30 billion yuan in sales that day, but ideally 50 billion. Its sales last year on the holiday were just 19.1 billion. In order to accommodate the expected boost, T-mall has expanded its bandwidth capacity. The number of participating sellers will also double from 10,000 to 20,000.
~ Tencent, on the other hand, is quite confident in its promotion channels. It's trying to push notifications and pop-ups to its 300 million QQ users, which has proven to be the most effective way to get page views in the past. Their e-commerce site Yixun (易迅) is also distributing over 100 million coupons expected to bring in at least 1.5 billion yuan in sales.
~ Another powerful "weapon" of Tencent's is its e-commerce open platform, which provides a cheap channel for sellers to advertise on.
~ A new arena for the online retailer battle is the O2O (online-to-offline) business. Tencent has shown potential in the widespread application of WeChat, stretching O2O business into the restaurant industry and online payment service in city shopping malls. Orders from WeChat terminals have contributed over 12 percent of total sales.
~ T-mall has also announced its cooperation with Yintai (銀泰) Department Store. 30,000 offline stores in 1,000 cities across China will participate in the Nov 11 O2O campaign, linking online payment with offline shopping by using the T-mall mobile app. Customers can use Gaode Maps (高德地圖) to find the nearest offline store and then make payments by scanning barcodes. They'll enjoy 50 percent discounts and other coupons. T-mall says that more O2O approaches will be experimented with in the future.
Original article: [Chinese]
Walmart to Set Up Shopping Centers In China
Corporation, page 32
~ Wal-Mart Stores Inc., the largest retailer in the world, has been constantly experimenting with new approaches to the Chinese market in recent years. It's most recent move is to look at developing smaller-scale shopping centres in addition to the "supercenters" that they've established in China's first tier cities.
~ On Oct 13, a source told the EO that WalMart's real estate division is considering potential sites in the cities of Meizhou (梅州), Huizhou (惠州), Jieyang (揭陽), Zhaoqing (肇慶) and Sihui (四會), all of which are in the southern province of Guangdong. The company is looking to develop sites in these cities into shopping centers.
~ On Oct 16, WalMart (China) confirmed with EO that the company is indeed looking to develop shopping centers, but that the specific number of stores and precise locations are yet to be decided.
~ The EO has learned that Walmart's shopping center will be mainly located in the third and four-tier cities. The company is also said to be setting up community-type shopping centers that are not on such a huge scale and that are similar to the "Walmart Market" stores that have proved popular in the company's home market.
~ "Walmart is very cautious about its shopping center project. We can't reveal any other details," a person with close ties to Walmart told the EO.
~ Walmart's cautious approach is related to the less than ideal market situation. A report released by Jones Lang LaSalle in July 2013 revealed that about 150 new shopping centers will open in 20 major cities such as Beijing, Shanghai, Guangzhou this year. A report by Ipsos showed that as of 2012, there were a total of 2,897 shopping centers accorss China. Intense competition in shopping centers is inevitable.
Original article: [Chinese]
